Morning wrap (03.08.2022)

• US indices finished yesterday's trading lower after a volatile session. S&P 500 dropped 0.67%, Dow Jones moved 1.23% lower and Nasdaq dipped 0.16%. Russell 2000 dropped 0.05%

• Pullback on the stock market was accompanied by a sell-off on US bond markets. US 10-year Treasury yields jumped 17 basis point yesterday, to 2.75%

• Moods deteriorated yesterday in the evening after China said it will hold live fire drills around Taiwan. Chinese state media said that People's Liberation Army will exercise "liberating Taiwan"

• Moods during the Asian session were mixed - S&P/ASX 200 dropped, Nikkei and Kospi gained while indices from China traded mixed

• DAX futures point to a more or less flat opening of the European cash session today

• Japanese officials reported that there was movement of Russian navy in recent days suggesting that Russian ships may join Chinese navy in exercises near Taiwan

• China has also banned imports of over 2,000 food products from Taiwan and suspended exports of natural sand and gravel to the island

• The Chinese UK ambassador warned UK politicians not to visit Taiwan as it would have serious consequences for China-UK relations. Warning came after Guardian reported that group of UK MPs plan to visit Taiwan later this year

• Fed's Bullard said that it looks like both Fed and ECB will be able to rein in inflation and achieve soft landing

• API report pointed to a 2.16 million barrel build in US oil inventories (exp. -0.4 mb)

• Major cryptocurrencies are trading mixed - Bitcoin drops 0.7%, Ethereum moves 1.7% lower and Ripple dips 1.9%

• Oil is trading higher today. Brent gains 1% and climbs back above $100 per barrel mark

• Precious metals benefit from USD weakness - gold and silver gain 0.5% each

• AUD and EUR are the best performing G10 currencies while USD, GBP and JPY lag the most

S&P 500 (US500) snapped a 3-day winning streak this month and traded lower for the second day in a row yesterday. Index is retesting a 4,100 pts price zone, this time as a support. Note that reversal occurred just slightly below the upper limit of the Overbalance structure, hinting that downtrend remains in play. Source: xStation5